JIM DAWSON
Time of change
Prior to the rumor of a couple hundred job cuts in Massachusetts upon completion of its mega-merger with FleetBoston Financial Corp., Bank of America named its new financial and corporate banking chiefs, completing a reorganization of its executive lineup in preparation for the official merger announcement, which took place last Thursday.
While Bank of America executives swear that new faces and new ideas will help BofA’s New England business strategy in the coming year, other bankers say Fleet employees should rethink their career goals.
“The impact of the merger on New England marketplace in the short run is very disruptive. If you’re an employee or client of any institution that is being acquired, you make a career decision based on the culture of the company and have to ask yourself if the coming change is the same culture, people, or career path that you want,” said Jim Dawson, president and chief operating officer of Boston Private Bank. “If I were an employee of Fleet, I would be concerned about the direction of the company, but I would hope Bank of America would be making a strong commitment to New England.”
The change is rapidly approaching for some.
Officials have long warned the mega-merger, which bank analysts say could lead to up to 12,000 job cuts companywide over the next year, will lead to a substantial but unspecified number of area job cuts where there are corporate overlaps.
At a hearing held by the Massachusetts Division of Banks’ Board of Bank Incorporators in February, Bank of America executives attempted to alleviate concerns about job loss by insisting that while layoffs are inevitable in any corporate takeover, other jobs may be moved to Massachusetts, keeping total employment about even.
And so the anticipation builds and the new Bank of America corporate executive board is in place – some old executives will remain and some new executives will join the team – and the merger is official.
“This merger is a nostalgic close for FleetBoston, but a very exciting beginning for the newly combined Bank of America,” said Ann Finucane, president of Bank of America’s Northeast region, in a statement. “We are excited about providing our 33 million consumer customers and 2.5 million business clients with unrivaled convenience and product breadth, while continuing our historic commitment to the Northeast region.”
‘A Huge Investment’
James H. Hance Jr. will give up his title as BofA chief financial officer, which he has held since 1987, to Mark D. Oken, Hance’s BofA colleague who is overseeing planning for the Fleet integration.
Edward J. Brown III will retire as BofA president of global corporate and investment banking and Alvaro G. de Molina, who has been BofA’s corporate treasurer for four years, will resume in Brown’s position.
Joseph R. Dewhirst, currently Fleet’s treasurer, will succeed de Molina as BofA treasurer.
Fleet Chairman and Chief Executive Officer Charles Gifford will become BofA chairman, and Kenneth D. Lewis, currently BofA’s chairman and chief executive officer, will remain the chief executive.
Those changes took place on Friday, one day after the $46 billion merger officially took place and was finalized between Bank of America and FleetBoston Financial.
According to Dawson, those changes come at a time of enormous change in the overall Bay State banking industry.
The most notable change, he said, is employee turnover.
“What we have seen over the years, especially back in 1999, was that there was a ton of turnover and if you talk with people at other banks who weren’t involved in those acquisitions, they were thrilled because they picked up great employees,” said Dawson, who said that the merger-madness of 1999 resulted in profitable 2000 year-end results for Boston Private because of the amount of new employees and new business the bank gained. “With this merger, we are planning on increasing our employment by 10 percent this year, simply because of this industry turnover. These changes impact everyone.”
Dawson said the rumored layoffs provide competitor banks a window of opportunity to bring in new and educated bankers, with their clients, to other banks.
“There is a window of opportunity for us because there are people who are unhappy and will be leaving and there are people who’ll wait it out and see what happens. People are unsure about a lot of change but there is a lot of inertia and there is a 12- to 18-month window where other banks will look to take advantage of that,” said Dawson. “For most of my colleagues who are not being acquired, we like times like this because it gives us a terrific opportunity to find wonderful and skilled bankers.”
As for the banking industry overall in Massachusetts, Dawson said such changes have been escalating over the past 10 years and he foresees another wave of corporate takeovers and banking acquisitions in the next decade.
For Bank of America executives, this merger is about building bigger and better companies.
“This merger is about delivering the combined capabilities of two powerful organizations to our customers, shareholders and communities and building one of the world’s most admired companies,” said Finucane.
But for now, Dawson said Massachusetts’ consumers and Bank of America competitors will watch this merger with a careful eye and hope that in the long run, Bank of America provides a good return on investment to the Massachusetts community.
“The industry has changed so dramatically over the last 10 years and mergers will continue as long as banks are willing to grow, and their [bank] stock prices provide them with a currency to make purchases,” said Dawson. “It is a time of big change. Once they bring a new management team and set a commitment, it’s good for [competitor banks] to expect [Bank of America] to be a good competitor and we need to be prepared. Bank of America is making a huge investment. They saw an opportunity in New England, and we are prepared for them to come in here with a huge investment in Massachusetts.”
